Households will be hit with the steepest council tax hike in 14 years in the new financial year when the average home will pay £81 more.

The inflation-busting 5.1% increase on band D properties in England takes the cost up to £1,671.

Lowest average council tax in England 2018/19 (Band D)

Nearly £2 billion extra will be raised as town halls take advantage of new freedoms to increase bills by as much as 5.99%.

Councils leaders said caps on bills since the Conservatives took power had left them with “little choice” but to ask residents to pay more as they struggle to balance the books.

Lord Porter, Local Government Association chairman, warned that town halls will still have to cut back services despite the increase to bills.

“Since 2010, council tax bills have risen by less than inflation and other key household bills,” he said.

“But faced with severe funding pressures, many councils feel they are being left with little choice but to ask residents to pay more to help them try and protect their local services.

“The extra income this year will help offset some of the financial pressures they face but the reality is that many councils are now beyond the point where council tax income can be expected to plug the growing funding gaps they face. This means councils will have to continue to cut back services or stop some altogether to plug funding gaps.

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“The need for adequate funding for local government is urgent. We have repeatedly warned of the serious consequences of funding pressures facing services caring for the elderly and disabled, protecting children and tackling homelessness for the people that rely on them and the financial sustainability of other services councils provide.”

The rise is the highest since 2004/5, but Communities Secretary Sajid Javid insisted bills were lower in real terms under the Conservatives.

Mr Javid announced in December a 1% increase to 2.99% in the maximum council tax hike permitted without triggering a local referendum.

England’s 152 social care authorities – the county and unitary councils and metropolitan boroughs which take the lion’s share of the tax – are allowed a 3% precept on top to help fund adult care.

Average band D council tax bills in shire areas are the highest at £1,749, up by £86, according to the Ministry of Housing, Communities and Local Government.

Its figures showed the same category of property in London will pay £1,405, an increase of £55 on 2017/18.

In the new financial year, 148 out of 152 adult social care authorities will add some or all of the 3% precept they can charge to cover adult social care.

The extra charge accounts for £30 of the average band D bill, the department said.

Mr Javid said: “Council tax in England is 7.6% lower in real terms than it was when we came to government, and we have introduced a legal right for local taxpayers to veto excessive increases.

“Under the last Labour government council tax doubled and in Labour-run Wales it has trebled.”

Shadow communities secretary Andrew Gwynne said: “This shows that under the Tories, you pay more for less.

“Over the last eight years, council budgets have been reduced by 50% and services cut, with local people forced to pick up the slack as council tax bills soar.”